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Quality  of  Work  Life  in  the  Hospitality   Industry  

-­‐  The  contingent  workers’  perspective  -­‐    

08  

Fall  

Author:         Irene  Kerstin  Hunker    

Supervisor:         Jesper  Clement  (Department  of  Marketing)   Hand-­‐in  date:         11th  of  November  2014  

Copenhagen  Business  School,  2014     Cand.  Soc.  in  Service  Management   Master’s  Thesis  

 

 

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Table of Contents

Table of Contents ... 01

List of Tables ... 03

List of Illustrations ... 04

Abstract ... 05

1. Introduction and Problem Formulation ... 06

2. Theoretical Background ... 09

2.1 Contingent Work in the Hospitality Industry ... 09

2.1.1 Defining Contingent Work ... 09

2.1.2 Characteristics of Contingent Work in the Hospitality Industry ... 10

2.2 Explanation of the Quality of Work Life Concept ... 13

2.2.1 Definition of Quality of Work Life ... 13

2.2.2 Herzberg’s Two-Factor Theory ... 16

2.2.3 The Great Place to Work Model ... 20

2.3 Positive Outcomes of an Improved Quality of Work Life ... 27

2.3.1 Reduced Turnover and Absenteeism ... 27

2.3.2 Organizational Commitment ... 28

2.3.3 Growth and Profitability – The Service-Profit Chain ... 29

2.4 The Importance of Leadership ... 35

2.5 Summary of the Theoretical Background ... 37

3. Model and Hypotheses ... 40

4. Methodology ... 42

4.1 Research Philosophy ... 42

4.1.1 Positivism ... 42

4.1.2 Interpretivism ... 43

4.2 Research Approach ... 44

4.3 Method of Data Collection ... 45

4.3.1 Questionnaire Design ... 46

4.3.1.1 Questionnaire Structure and Measurement Scale ... 46

4.3.1.2 Choice of Personal Questions ... 48

4.4 Target Population ... 49

4.5 Sampling Method ... 49

4.6 Validity and Reliability ... 50

5. Results ... 52

5.1 Description of the Sample Population ... 52

5.2 Reliability and Validity Measures ... 55

5.3 Testing of Hypothesis ... 55

5.3.1 Pay and Benefits ... 56

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5.3.2 Opportunities ... 57

5.3.3 Job Security ... 59

5.3.4 Credibility ... 60

5.3.5 Respect ... 61

5.3.6 Openness and Fairness ... 63

5.3.7 Pride in Work and Company ... 64

5.3.8 Camaraderie and Friendliness ... 65

5.4 Comparison of the Eight Dimensions ... 66

5.4.1 General Findings ... 66

5.4.2 Results of the one-way ANOVA ... 70

6. Discussion and Managerial Implications ... 76

7. Limitations and Recommendations for Future Research ... 82

7.1 Limitations of the Research ... 82

7.2 Recommendations for Future Research ... 83

8. Conclusion ... 85

Bibliography ... 87

Appendix ... 94  

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List of Tables

Table 1: Criteria for the 100 best Companies to work for ... 15

Table 2: Interpreting Levels of Satisfaction ... 31

Table 3: Characteristics of Transactional and Transformational Leadership ... 36

Table 4: Nationality distribution of the sample population ... 53

Table 5: Descriptive statistics of the variables regarding pay and benefits ... 56

Table 6: Descriptive statistics of the variables regarding opportunities ... 57

Table 7: Distribution of ratings regarding variable s_8 ... 58

Table 8: Descriptive statistics of the variables regarding job security ... 59

Table 9: Distribution of ratings regarding variable s_14 ... 60

Table 10: Descriptive statistics of the variables regarding credibility ... 61

Table 11: Descriptive statistics of the variables regarding respect ... 61

Table 12: Descriptive statistics of the variables regarding openness and fairness ... 63

Table 13: Distribution of ratings regarding variable s_26 ... 64

Table 14: Descriptive statistics of the variables regarding pride in work and company ... 65

Table 15: Descriptive statistics of the variables regarding camaraderie and friendliness ... 65

Table 16: Comparisons of the mean scores of all eight dimensions ... 66

Table 17: Results of the Hypotheses Testing ... 68

Table 18: Significant results of the one-way ANOVA with gender as a test factor ... 70

Table 19: The Stages of Human Life ... 72  

     

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List of Illustrations

Figure 1: Structure of the Thesis ... 08

Figure 2: Herzberg’s Two-Factor Theory ... 17

Figure 3: The Great Place to Work Model ... 20

Figure 4: The three Relationships in the Great Place to Work Model ... 21

Figure 5: The Links in the Service-Profit Chain ... 30

Figure 6: Hypothetic model of factors positively contributing to an improved quality of work life for contingent workers in the hospitality industry ... 41

Figure 7: Structure of the Questionnaire ... 47

Figure 8: Nationality distribution of the sample population ... 53

Figure 9: Number of Seasons worked ... 54

Figure 10: Male respondents’ ratings of variable s_8 ... 58

Figure 11: Female respondents’ ratings of variable s_8 ... 59

Figure 12: Comparison of the mean score of all eight dimensions ... 67

Figure 13: Model of the quality of work life for contingent workers in the hospitality industry ... 69  

     

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Abstract  

Background The use of contingent workers is an ubiquitous characteristic of the hospitality industry, yet their employment poses significant challenges and often holds considerable consequences. Since the quality of the service delivery depends so heavily on the employees’ behavior, it appears pivotal to create a nurturing work environment characterized by high levels of both employee satisfaction and quality of work life.

Purpose The purpose of this thesis is to deepen the understanding of the concept of quality of work life, as well as to gain an insight into the mindset and characteristics of contingent workers in the hospitality industry. Combining those to topics, this thesis additionally aims at identifying factors that positively contribute to an improved quality of work life for seasonal employees in the hospitality industry.

Design/Methodology To accomplish the research objective, a quantitative research design was applied within this thesis. As a method of data collection, the researcher chose to conduct a self-administered online questionnaire.

Findings The study identified eight distinct dimensions that contribute to an improved quality of work life for contingent workers in the hospitality industry. The credibility of leaders and managers was found to be the most important dimension, whereas the appreciation of employees was identified as the most important variable.

Keywords: Quality of work life, internal service quality, contingent work, seasonal employment

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1. Introduction and Problem Formulation

“Human resource management affects competitive advantage in any firm, through its role in determining the skills and motivation of employees” (Porter 1985, quoted in Smithey Fulmer et al., 2003, p. 965). It appears to be the primary task of human resource managers to enhance employees’ ultimate work experience and create a work environment capable of attracting and retaining potential employees (Lau, 2000; Burchell and Robin, 2011).

Especially in service-providing organizations, where frontline employees are pivotal for the delivery of a consistent and premium customer experience (Ind, 2003; Wallace and de Chernatony, 2007), “the quality of service is embedded in the quality and performance of HR” (Bansal et al., 2001, p. 64). Scholars hence suggest a paradigm shift from focusing on numbers only to focusing on employees, considering them customers rather than servants (Heskett et al., 1994; Lau, 2000) and referring to employees as “assets to be invested in rather than costs to be controlled” (Bansal et al., 2001, p. 63). Heskett et al.’s (1994) renowned service-profit chain framework is based on this assumption, claiming that the improvement of a firm’s internal service quality, also referred to as quality of work life, will ultimately drive general profits and growth. This link was empirically tested and confirmed by Smithey Fulmer et al. (2003), who demonstrated that by creating an attractive work place firms yield better financial results and benefit from an improved bottom-line performance. The authors claim that “(b)eing an attractive employer may create an important intangible asset, positive employee relations, that differentiates firms in a value-producing way” (Smithey Fulmer et al., 2003). The creation of a great place to work by implementing quality of work life programs may hence be considered the key to competitive advantage in the global environment (Smithey Fulmer et al., 2003).

In the hospitality industry in particular it appears highly important to improve the quality of work life for employees. According to Hatch and Schultz (2009, p. 117), compared to a product, whose quality and presentation are rather predictable, “services depend so heavily on the behavior of the employees who deliver them”. As a result, since they often serve as a single point of contact between customers and the respective service organization, service employees’ attitudes and behaviors significantly influence customers’ experiences, evaluations and overall satisfaction levels (Lau, 2000; Johnson and Ashforth 2008, cited in Buonocore, 2010, p. 378).

Indisputably, the use of seasonal employees is an ubiquitous characteristic of the

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hospitality industry. Due to seasonality and its accompanying fluctuations in demand, it appears to be rather unfeasible for hospitality organizations to rely on permanent employees only (Buonocore, 2010). Contingent workers’ performance therefore appears to be a crucial determinant of any hospitality organization’s service quality (Lau, 2000; Johnson and Ashforth 2008, cited in Buonocore, 2010, p. 378).

Having acknowledged the importance of seasonal employees in the hospitality industry, it seems rather surprising that literature identifies primarily negative consequences of employing contingent workers (Lee-Ross, 1995; Connelly and Gallagher, 2004; Reynolds et al., 2004; Ainsworth and Purss, 2009; George et al., 2010; Alverén et al., 2012). Compared to permanent employees the levels of commitment, motivation and performance were found to be rather low. Moreover, an elevated turnover rate followed by increased costs for both recruiting and training appear to be characteristic for seasonal employees (Lee-Ross, 1995;

Connelly and Gallagher, 2004; Reynolds et al., 2004; Ainsworth and Purss, 2009; George et al., 2010; Alverén et al., 2012).

Considering the inalienability of contingent workers in the hospitality industry, it would seem highly beneficial for respective service organizations to detect ways in which to improve the quality of the work life, also referred to as internal service quality, for seasonal employees. According to Xu and van der Heijden (2005) internal service quality appears to be the main contributor to employee satisfaction, which in turn may lead to increased levels of commitment, motivation and eventually to an improved bottom-line performance. Hence, investing into an improvement of the quality of work life for contingent workers may considerably reduce the negative consequences and challenges their employment poses to organizations.

Unfortunately, little research has been conducted with regards to the quality of work life of employees in the hospitality industry, as well as rarely any empirical investigations have been directed towards seasonal employment in the hospitality industry, regardless of its importance and ubiquity (Lee-Ross, 1995; Connelly and Gallagher, 2004). Besides, to date no study has combined the two topics and investigated or identified factors determining a high quality of work life for contingent workers in the hospitality industry. The lack of research in this area, as well as the significance and inalienability of employing contingent workers, constitute therefore the purpose of the present study, attempting to answer the following research question:

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What factors contribute positively to an improved quality of work life for contingent workers in the hospitality industry?

To accomplish this objective, an extensive review of existing literature on contingent work and quality of work life was conducted and elaborated in the first part of this thesis. Based on the theory, hypotheses were derived, resulting in the proposition of a model identifying factors that potentially contribute to an improved quality of work life for seasonal employees.

Subsequently, the model was tested empirically by conducting an online questionnaire among contingent workers in the hospitality industry. Analyses and results of this investigation are presented in the final part of this study. The following Figure 1 outlines the structure of this thesis in detail.

Fig. 1: Structure of the Thesis.

Source: Developed for this thesis.

• INTRODUCTION AND PROBLEM FORMULATION

Chapter 1

• THEORETICAL BACKGROUND

• Contingent work in the hospitality industry

Chapter 2

• Quality of work life, Herzberg, Great Place to Work

• Positive Outcomes

• MODEL AND HYPOTHESES

Chapter 3

• METHODOLOGY

• Philosphy, Questionnaire, Sampling

Chapter 4

• RESULTS

• Hypotheses Testing, One-way ANOVA

Chapter 5

• DISCUSSION AND MANAGERIAL IMPLICATIONS

Chapter 6

• LIMITATIONS AND RECOMMENDATIONS FOR FUTURE RESEARCH

Chapter 7

• CONCLUSION

Chapter 8

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2. Theoretical Background

The subsequent literature review serves as a basis for the derivation of hypotheses to be tested later in this study. It provides a detailed overview of the nature of contingent work in the hospitality industry, as well as of the concept of quality of work life. Furthermore, Herzberg’s Two-factor theory and the Great Place to Work® Model will be presented, and positive outcomes of an improved quality of work life outlined. Finally, the importance of leadership will be reported and a summary of the key findings of this chapter provided.

2.1 Contingent Work in the Hospitality Industry 2.1.1 Defining Contingent Work

As a response to todays ever changing and evolving economy the use of contingent workers has become a significant tool for organizations by allowing them to become more flexible and reducing labor costs more effectively (de Jong et al., 2007). Contingent work agreements, as opposed to standard or permanent ones, are commonly defined as “any job in which an individual does not have an explicit or implicit contract for long-term employment or one in which the minimum hours worked can vary in a nonsystematic manner” (Polivka and Nardone 1989, quoted in Connelly and Gallagher, 2004, p. 960). Though, Connelly and Gallagher (2004) propose further categorization of contingent workers into four different subgroups since, according to the authors, contingent work agreements differ too much to view them as one homogenous group.

As a first group, Connelly and Gallagher (2004) mention temporary help-service firms or temporary staffing agencies, as for instance Manpower or Adecco. Work agreements in this category are characterized by involving three parties - the service firm, the worker and the client firm. The worker is directly employed by the service firm or agency and is then used at different client sites for the fixed duration of a particular assignment (Connelly and Gallagher, 2004).

Secondly, Connelly and Gallagher (2004) point out a group referred to as independent contractors or freelancers. Workers belonging to this group are widely used within the information technology (IT) business and can be defined as “self-employed individuals who sell their services to client organizations on a fixed-term or project basis” (Connelly and Gallagher, 2004, p. 961).

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Based on the second characteristic of contingent work, “…one in which the minimum hours worked can vary in a nonsystematic manner” (Polivka and Nardone 1989, quoted in Connelly and Gallagher, 2004, p. 960), the third group includes direct-hire temporary arrangements. This group of contingent workers is often found in larger organizations which prefer direct-hire over using temporary staffing agencies due to the high frequency additional workers are needed for short-term assignments (Connelly and Gallagher, 2004).

Finally, the fourth and last subgroup comprises individuals who are directly hired by an organization but work on a seasonal contract. This form of work arrangement, mainly apparent within the tourism and hospitality industry, falls into the category of contingent work since the limited number of weeks of employment (due to seasonality) does not allow for long-term contractual arrangements (Connelly and Gallagher, 2004). Hence, seasonal work is considered being short-term and of finite duration (Gallagher and McLean Parks 2001, Lautsch 2002, cited in Ainsworth and Purss, 2009, p. 218).

As to the present study, the focus will lie on Connelly and Gallagher’s (2004) fourth group, contingent workers hired on a seasonal contract.

2.1.2 Characteristics of Contingent Work in the Hospitality Industry

As mentioned afore, existing literature on contingent workers in the hospitality industry depicts rather negative attributes of this employee group, focusing primarily on the aspects of turnover, commitment and performance (Lee-Ross, 1995; Connelly and Gallagher, 2004;

Reynolds et al., 2004; Ainsworth and Purss, 2009; George et al., 2010; Alverén et al., 2012).

Turnover

Turnover represents a major issue throughout the hospitality industry, ranging from 60% to up to 300% (Worcester 1999, cited in Reynolds et al., 2004, p. 230), thereby causing a considerable financial burden to organizations. According to Lee-Ross (1995) costs may be twice as high for organizations that are forced to recruit and then train new seasonal employees each year, reflecting the increase in direct costs that a high turnover rate bears.

Though, also an increase in indirect costs is worth mentioning, including the loss of employee expertise, productivity and a reduction in service quality (Alverén et al., 2012). In service- providing organizations the relationship between customers and employees appears to be crucial for generating profits. As Xu and van der Heijden (2005, p. 141) outline, “(l)ong-term employees tend to develop personal relationships with their customers”, contributing

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positively to customer retention. Hence, a high turnover rate may hinder such relationships from developing, causing considerable profit losses.

In addition to that, a high turnover rate may lead to the disruption of social structures and networks, which were found to be particularly important with regards to satisfaction and motivation levels of seasonal employees (Alverén et al., 2012).

Besides, Berry (1995, cited in Xu and van der Heijden, 2005, p. 140) found that a high turnover rate often discourages management from investing in recruitment, training and development practices, leading to a general decrease in employee productivity and satisfaction.

Commitment

Another issue recurring in the literature regarding characteristics of seasonal employees is the level of commitment towards the employing organization. Generally, organizational commitment concerns “a person’s sense of attachment to his or her organization” (Arnold et al., 1998, p. 210). According to several researchers (Ainsworth and Purss, 2009; George et al., 2010; Alverén et al., 2012) contingent workers appear to show lower levels of commitment, which may accordingly result in lower levels of organizational citizenship behavior (OCB).

OCB is referred to as “(p)erformance by employees beyond what is required or expected and which does not lead to any formal rewards” (Smith et al. 1983, cited in Alverén et al., 2012, p. 1958). It appears to be pivotal in service organizations since, due to the direct interaction between employees and customers, employees’ attitudes and behaviors seem to determine an organization’s success in delivering high quality service to its customers (Lau, 2000; Hatch and Schultz, 2009; Johnson and Ashforth 2008, cited in Buonocore, 2010, p. 378).

Another repercussion that low levels of employee commitment lead to is the decrease of the respective organization’s relational wealth. Relational wealth can be defined as “the value created by and for a firm through its internal relations among and with employees, as well as its external alliances and reputation” (Leana and Rousseau 2000, quoted in George et al., 2010, p. 530). It is the relationships and connections employees have with each other and the firm that make relational wealth an exceptional competitive advantage for any company since such relationships are very difficult for competitors to imitate and acquire (Leana and Rousseau, 2000).

Finally, employees showing low levels of organizational commitment are less likely to help colleagues (Arnold et al., 1998, p. 213), a condition that may considerably harm overall

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performance in a characteristically stressful and busy seasonal work environment.

Performance

In addition to a high rate of turnover and comparably low levels of commitment, contingent workers are often characterized as a low skilled and low performing group of workers (Connelly and Gallagher, 2004; Ainsworth and Purss, 2009). Seasonal work is considered highly labor intense, not allowing for much additional time that could be used for employee training. Moreover, the fact that only few employees return for the next season, a high turnover rate, as well as the finite and short duration of employment often leaves organizations without any incentive to invest in substantial training programs (Lee-Ross, 1995; Connelly and Gallagher, 2004; Berry 1995, cited in Xu and van der Heijden, 2005, p.

140; Ainsworth and Purss, 2009). Hence, contingent workers appear to receive only few opportunities for improving their skills and know-how.

Evidently, employing contingent workers poses several challenges to hospitality organizations. A high turnover rate and low levels of both commitment and performance make this employee group appear rather costly. Though, being aware of the negative characteristics may as well serve as an opportunity to improve contingent workers’ work conditions and hence, turn their employment into an advantage to any organization. Investing into an improvement of contingent workers’ quality of work life may serve as a remedy for the challenges they pose to hospitality organizations. The reasons behind this assumption will be clarified by deepening our understanding of the quality of work life concept. The subsequent part of this study will therefore outline the concept’s origins and definitions.

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2.2 Explanation of the Quality of Work Life Concept 2.2.1 Definition of Quality of Work Life

The origins of the quality of work life concept go back to 1972, where the term was first introduced during an international labor relations conference (Hian and Einstein 1990, cited in Lau, 2000, p.423). After United Auto Workers and General Motors had launched quality of work life programs, the concept attracted additional researchers’ attention, leading to a profound body of research defining and identifying the main focus areas of a quality of work life program (Robbins, 1989; Havlovic, 1991; Lau and May, 1998; Lau, 2000; Kandasamy and Ancheri, 2009).

Despite the substantial amount of research on the quality of work life concept, no universally accepted definition has been made yet (Krueger et al., 2002), leading to a variety of definitions explaining quality of work life from different perspectives. According to Davis and Cherns (1975, cited in Levine et al. 1984, p. 83) this situation seems appropriate though, since “different people have different perspectives as to what makes for a high quality of working life”. However, quality of work life has been recognized as “a multidimensional construct” which “may not be universal or eternal” (Lau and May, 1998, p. 212).

Due to the scope of this thesis, only some of the definitions will be outlined in the subsequent. Robbins (1989, p. 207), for instance, classified quality of work life as “a process by which an organization responds to employee needs by developing mechanisms to allow them to share fully in making the decisions that design their lives at work”.

Heskett et al. (1994, cited in Xu and van der Heijden, 2005, p. 140) offer another definition of quality of work life, or internal service quality as they refer to, by describing the concept as

“the quality of the work environment that contributes to employee satisfaction”, which can be assessed by measuring “the feelings that employees have towards their jobs, colleagues and companies” (Heskett et al. 1994, p. 168). In addition to that, the authors note that the way people treat and communicate with each other, as well as their attitudes towards one another play a crucial part (Heskett et al., 1994; Xu and van der Heijden, 2005).

According to Davis (1983, quoted in Kandasamy and Ancheri 2009, p. 329) quality of work life captures “the quality of the relationship between employees and the total working environment with human dimensions added to the usual technical and economic consideration”. Carayon (1997, cited in Kandasamy and Ancheri 2009, p. 329) defined the concept as a “complex interaction of the elements of a work system”, where individual task,

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organizational factors, environment, tools and technology are classified as the respective elements. A further definition can be found in the work of Walton (1975, cited in Kandasamy and Ancheri 2009, p. 329) who named the following to be dimensions of the quality of work life concept:

• adequate and fair compensation,

• safe and healthy working conditions,

• opportunities for personal growth and development,

• satisfaction of social needs at work,

• protection of employee rights,

• compatibility between work and non-work responsibilities,

• and the social relevance of work life.

Lau and May (1998, p. 213) provide a definition mentioning concrete focus areas of a quality of work life program by referring to the concept as “the favorable conditions and environments of a workplace that support and promote employee satisfaction by providing employees with rewards, job security, and growth opportunity.”

Even though Levering and Moskowitz (1994, cited in Lau and May 1998, p. 217) did not use the term quality of work life within their research, their criteria for evaluating the 100 best companies to work for in the USA resemble closely the afore outlined definitions since “they center around job security, employee growth opportunities, rewards and overall employee satisfaction” (Lau and May, 1998, p.217), as well as they capture employee relations towards the company, the job and colleagues. As such, the criteria and the sample of their accompanying evaluation questions (see Table 1) constitute a valuable source for the empirical research of this thesis.1

                                                                                                               

1  Further  details  in  Chapter  4.3.1.1  Questionnaire  Structure  and  Measurement  Scale.    

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Criteria Sample Questions For Evaluation

Pay and benefits Does the company pay at or near the top of its industry?

Does the company offer unusual or unique benefits?

Are the health and retirement plans among the best in the industry?

Is the company sensitive to employees’ work and family needs?

Opportunities Are training programs available for employees to learn new skills?

What is the possibility for advancement in ranks and promotion?

Is the company policy and practice to promote from within?

How well are women and minorities doing there?

Job security Does the company have a written or implicit no-layoff policy?

Has the company recently gone through a difficult period without resorting to layoffs?

Does the company assist employees when layoffs are unavoidable?

Pride in work and company

Do employees feel a direct connection with the products or services the company provide?

Do employees feel proud of their personal achievement?

Are employees recognized for their outstanding achievement?

Openness and fairness

How well are communications between employees and upper-level managers in suggestions, criticism, and complaints?

Are top executives accessible to everyone?

Does the company have effective evaluation and grievance systems?

Camaraderie and friendliness

Do employees feel part of a family, team, or special community that includes everyone at all ranks?

Do employees enjoy working (and playing) with one another?

Do employees socialize together at various functions during the year?

Tab.1: Criteria for the 100 best Companies to work for.

Source: Lau and May (1998), p. 218.

Having a closer look at Table 1, one may draw a connection between Levering and Moskowitz’s (1994, cited in Lau and May 1998, p. 218) criteria and important theories as Herzberg’s Two-Factor Theory and Levering and Lyman’s Great Place to Work® Model. Pay and benefits, opportunities, and job security are factors found in Herzberg’s motivation- hygiene theory, whereas pride in work and company, openness and fairness, and camaraderie and friendliness resemble closely the dimensions of the Great Place to Work® Model.

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2.2.2 Herzberg’s Two-Factor Theory

Herzberg’s Two-factor theory also referred to as dual-factor theory or motivation-hygiene theory is a well-known and universally accepted theory of work motivation, trying to explain

“how work activities and the nature of one’s job influence motivation and performance”

(Herzberg 1966, and Herzberg et al. 1959, cited in Steers et al. 2004, p. 381). Herzberg et al.

(1997, originally published in 1959) depict the difficulty of determining what people actually want from their jobs since research provides a variety of contradictory answers. As a consequence, Herzberg et al. (1997) developed the Two-factor theory arguing that work motivation and job satisfaction stem from so-called ‘motivators’, factors such as

“achievement, recognition, the work itself, responsibility, advancement, and growth” (Porter et al., 2009, p. 9). It is factors that are “associated with the work itself or with outcomes directly derived from it” (Robbins and Judge, 2010, p. 90) that have the potential of intrinsically rewarding employees and hence leading to job satisfactions. Factors such as supervision, interpersonal relations, physical working conditions, salary, company policies and administrative practices, benefits, and job security are referred to as ‘hygiene’ factors (Herzberg et al., 1997). According to Herzberg et al. (1997) they can be compared to medical hygiene, acting as a preventive rather than a curative. They cannot lead to satisfaction; they solely have the potentiality of preventing dissatisfaction and poor job performance.

Herzberg’s theory recognizes job satisfaction and dissatisfaction as two continua, meaning that the opposite of job satisfaction is not job dissatisfaction, but no job satisfaction. The same is applicable for job dissatisfaction, of which the opposite is no job dissatisfaction (Latham, 2012).

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Fig. 2: Herzberg’s Two-Factor Theory.

Source: Porter et al. (2009) and Herzberg et al. (1997).

Criticism of Herzberg’s theory

One of the criticisms of Herzberg’s theory concerns the claim that hygiene factors cannot lead to satisfaction or job motivation since, according to a study by Pinder (1998), also hygiene factors may act as motivators. Another criticism was put forward by Vroom (1964, cited in House and Wigdor 2006, p. 371), who questioned the research method Herzberg used, namely the storytelling critical-incident method. According to Vroom (1966, quoted in House and Wigdor 2006, p. 371/371), “(p)eople tend to take the credit when things go well, and enhance their own feelings of self-worth, but protect their self concept when things go poorly by blaming their failure on the environment”. Hence, Vroom (1964, cited in House and Wigdor 2006, p. 371), criticizes Herzberg’s theory to be method bound, a criticism also mentioned in the work of Robbins and Judge (2010). Vroom (1964, cited in House and Wigdor 2006, p. 372) goes on claiming that the “necessity for interpretations of the data by a rater may lead to contamination of the dimensions so derived”. In addition to that, Ewan (1964, cited in House and Wigdor 2006, p. 373) mentions the lack of a measure of overall satisfaction as one of the problems of Herzberg’s theory. According to Ewan (1964, cited in House and Wigdor 2006, p. 373) calling the factors satisfiers and dissatisfiers appears rather questionable in the absence of a measure for overall satisfaction. Besides, some scholars criticize the theory for lacking attention to individual differences since they appear to be

Achievement   Recognition   Work  itself   Responsibility     Advancement   Growth  

Supervision   Salary  

Company  Policies   Administrative  Practices   BeneNits  

Job  Security  

M O T IV AT IO N  F AC T O R S  

 

H YG IE N E  F AC T O R S  

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important moderators with regards to job motivation (Porter et al., 2009).

Despite the critics, Herzberg’s Two-factor theory remains influential and valuable (Furnham et al., 1999, cited in Lundberg et al. 2009, p. 892; Robbins and Judge, 2010). It has been stimulating a considerable amount of research in the area of work motivation, and it enjoys great popularity among managers all over the world (Porter et al., 2009).

Finally, considering the similarity of some of its factors with Levering and Moskowitz’s (1994, cited in Lau and May 1998, p. 218) criteria for the 100 best companies to work for, it appears utterly valuable for the purpose of the present study.

Pay and benefits

As to the potential of pay and benefits as a motivator or satisfier of employee needs, research findings differ considerably. Some researchers, as for instance Taylor (1911, cited in Latham 2012, p. 103) mention pay to be the primary incentive to work, whereas others such as Viteles (1932, cited in Latham 2012, p. 103) claim the contrary. Viteles (1932, cited in Latham 2012, p. 103) mentions money to be only one of the motives of the employee; more important appears to be “the wish to enjoy the feeling of worth, recognition, and respect on the part of others” (1932, cited in Latham 2012, p. 103). Herzberg et al. (1997) seem to agree with that notion, considering salary a factor defining the job situation, being primarily a dissatisfier rather than a satisfier. Though, pay and benefits need to be adequate for employees not be dissatisfied with their job. Also Lawler (1971, cited in Latham 2012, p. 104) emphasizes that “pay is important to the extent that it is perceived to be instrumental in satisfying a person’s needs”.

Putting this relation into the context of the present study on quality of work life, one may expect pay and benefits to positively contribute to the quality of work life, leading to the following hypothesis:

Hypothesis 1: There is a positive relationship between pay and benefits and the quality of work life for contingent workers in the hospitality industry.

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Opportunities

The opportunities a work place offers to its employees, such as training and development programs or opportunities for promotion, growth and advancement are classified as motivators within Herzberg’s theory (Herzberg et al., 1997; Porter et al., 2009.) As such, they have the potentiality to lead to job satisfaction and motivation, eventually resulting in improved performance and company profitability (Heskett et al., 1994; Herzberg et al., 1997).

According to Levering and Moskowitz (1994, cited in Lau and May 1998, p. 217) a crucial part within the domain of opportunities is the availability of equal opportunities for all employees, regardless of gender, age or cultural background.

Considering the fact that opportunities are recognized as motivators or satisfiers, their contribution to an improved quality of work life is expected to be positive. Hence, the following hypothesis needs to be stated:

Hypothesis 2: There is a positive relationship between development opportunities and the quality of work life for contingent workers in the hospitality industry.

Job Security

Job security is like pay and benefits recognized as a hygiene factor within Herzberg’s Two-factor theory, meaning that its presence and provision lead to the absence of dissatisfaction. It is a factor characterizing the job situation, making the work tolerable for the employee (Herzberg et al., 1997). According to Lau and May (1998), offering job security an organization practices an employee-oriented culture, leading to benefits such as the maintenance of know-how and experience.

As to seasonal employees in the hospitality industry, job security and especially the possibility of returning for the next season, are expected to positively contribute to the quality of work life of this employee group, leading to the subsequent hypothesis:

Hypothesis 3: There is a positive relationship between job security and the quality of work life for contingent workers in the hospitality industry.

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2.2.3 The Great Place to Work® Model

Levering and Moskowitz’s 1984 book ‘The 100 best Companies to work for in the USA’, has formed the basis of a longsome and detailed body of research on the quality of work life concept, leading among other things to the foundation of the Great Place to Work Institute® and the Great Place to Work® Model. The Great Place to Work® Model, as illustrated below in Figure 3, was developed by the Institute founders Robert Levering and Amy Lyman, identifying five distinct dimensions of a so-called great work place – work places with a high quality of work life for their employees (Burchell and Robin, 2011). Since 1998, the Great Place to Work Institute® has also been administering the employee surveys for the ‘Fortune’s 100 Best Companies to work for’ list (Smithey Fulmer et al., 2003).

Fig. 3: The Great Place to Work® Model.

Source: Based on Burchell and Robin (2011), p. 4.

Several studies showed that the Great Place to Work® Model is applicable regardless of the size or the geographic location of the company in focus, highlighting the tremendous value of it for world and industry wide quality of work life research (Burchell and Robin, 2011).

Considering the purpose of the present study, the Great Place to Work® Model seems utterly valuable and expedient as it offers great insight into the dimensions that constitute a work place with a high quality of work life for its employees. It will hence serve as a source of reference for the empirical research of this study.2

                                                                                                               

2  Further  Details  in  Chapter  4.3.1.1  Questionnaire  Structure  and  Measurement  Scale.    

Credibility Respect

Fairness Pride

Camaraderie

T R U

S

T

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It appears that leaders who incorporate the five dimensions of a great work place – credibility, respect, fairness, pride, and camaraderie – into policies and practices, enhance the ultimate work experience for their employees. It can therefore be referred to as “the central task of effective leadership in today’s organization (Burchell and Robin, 2011, p. 7).

Simultaneously it contributes to a strengthening of the relationship between employees and their leaders, between employees and their job, as well as between employees and each other (see Figure 4). In his book from 1998, ‘A great place to work: what makes some employers so good – and most so bad, Robert Levering has identified these three relationships to be vital indicators of a great place to work, implying that significant attention should be directed towards the creation and maintenance of those in order to achieve corporate success.

Fig. 4: The 3 relationships in the Great Place to Work® Model.

Source: Developed for this thesis.

The primary and central issue of the Great Place to Work® Model is trust. According to Burchell and Robin (2011), trust enhances the quality of a work place by improving both the flow of communication and the cooperation between employees and their leaders. In work relationships that are characterized by high levels of trust, all parties involved appear to be more willing to help and encourage each other, leading to enhanced productivity. Besides, employees seem to rely on rather than question leaders’ decisions and courses of action when trust shapes their relation. It can therefore be considered the “foundation of leadership”

(Robbins and Judge, 2010, p. 158).

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Though, in order to experience high levels of trust and benefit from its substantial advantages, the following qualities, or dimensions of trust, need to be met: credibility, respect and fairness (Burchell and Robin, 2011).

Credibility

A leader’s credibility is based on his or her trustworthiness, expertise and authenticity. In this regard it is pivotal that leaders share information openly, creating a two-way communication flow by promoting both informative and accessible communication. When talking about informative communication, Burchell and Robin (2011) highlight the importance of informing employees about what is expected of them, what their job tasks involve, as well as what the company’s status quo, goals, and future aspirations are.

Accessible communication, on the other hand, goes back to the approachability of leaders and their ability to answer employees’ questions at any time, in order for them to avoid any ambiguities or misunderstandings regarding job tasks. Employees should feel comfortable talking to and approaching their leaders, as well as they should feel heard and considered.

Generally, information needs to be meaningful to employees and their daily work routines.

Hence, the quantity and format of the information flow poses a delicate challenge to leaders at all levels, making two-way communication one of the most difficult and important tasks at the same time (von Marrewijk, 2004; Burchell and Robin, 2011).

In addition to efficient communication, a leader’s competence is crucial for him or her to seem credible. Employees need to feel a certain assurance that their leaders know what they are doing. Whether he or she is able to meaningfully distribute responsibilities, take clever decisions and keep the overview, as well as his or her ability to communicate and follow the company’s vision appear to be key aspects (Burchell and Robin, 2011).

As a third critical facet of credibility, Burchell and Robin (2011) mention the leader’s integrity. According to the authors, “integrity is created through the sum total of leader behavior and an intuition about the leader’s intentions” (Burchell and Robin, 2011, p. 44). In this regard it is essential for leaders to walk the talk, stand up for their opinion, and be reliable, honest and ethical (Burchell and Robin, 2011).

The Great Place to Work® Model suggests a positive relationship between credibility and the quality of work life. The same is expected to be valid for the quality of work life of contingent workers in the hospitality industry, leading to the formulation of Hypothesis 4.

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Hypothesis 4: There is a positive relationship between the credibility of a company and its managerial practices and the quality of work life for contingent workers in the hospitality industry.

Respect

While two-way communication, competence and integrity promote a leader’s credibility, the second dimension of trust – respect – appears to be gained through support, collaboration and caring. In order for leaders to earn their employees’ respect, a culture of open communication needs to be created, where employees are seen and valued, and their opinions are heard and considered. Employees also want to receive support from their leaders. Support may come in the form of individual training and development options, the provision of all necessary resources to get the job done, or deserved recognition for accomplishments (von Marrewijk, 2004; Burchell and Robin, 2011).

Moreover, the level of collaboration contributes to the creation of mutual respect.

Employees show respect for their leaders when their ideas and suggestions are listened to, when they receive constructive feedback on them, and when their creativity is valued.

Decision-making becomes thereby a collaborative action that each individual can be part of (Burchell and Robin, 2011).

In addition to support and collaboration, caring for your employees is expected to yield respect. Employees value organizations that show sincere interest in their well-being by creating a safe and pleasant work environment, and offering benefits for both employees’

work and personal lives, thereby promoting a suitable work-life balance for each employee.

Examples of programs that promote work-life balance may be flexible working hours, job sharing, on-site childcare, or on-site fitness and wellness centers (von Marrewijk, 2004;

Burchell and Robin, 2011).

Based on the above, the following hypothesis was formulated:

Hypothesis 5: There is a positive relationship between the level of respect a company shows towards its employees and the quality of work life for contingent workers in the hospitality industry.

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Fairness

The third dimension of trust and a significantly difficult area to master within the Great Place to Work® Model is the employees’ perception of fairness. Burchell and Robin (2011, p.

97) refer to it as “the employees’ sense that a level playing field exists with regard to decisions that affect them”. In today’s fast-moving economic world decisions often have to be made quickly, leaving little time to include all employees into the process. Transparency gets diminished, leading to the perception of fairness being based on the “employees’ faith in their leaders’ ability to make egalitarian decisions” (Burchell and Robin, 2011, p. 98). Clearly this makes fairness an extremely sensitive area, leaving leaders with the imperative of paying great attention to equity, impartiality and justice, also referred to as the three determinants of fairness (von Marrewijk, 2004; Burchell and Robin, 2011).

Equity, to begin with, encompasses the employees’ experience of whether tangible (pay and profits) and intangible (recognition and membership in the organization) rewards are administered in an equal and balanced way throughout the company (Burchell and Robin, 2011).

Impartiality, on the other hand, is concerned with decision-making and whether this process is conducted without favoritism, politics, friendship, or personal gain. It is crucial that employees perceive that all decisions are made in an equitable and impartial way and that they can relate to their leaders’ way of thinking and decision-making process, may that be through formal programs or a set of company values (Burchell and Robin, 2011).

Lastly, justice impacts significantly employees’ perceptions of fairness at the work place.

It is based on fair treatment of all members of the organization without bias and regardless of their age, gender, race or sexual orientation. Besides, for a work environment to become just, leaders need to appear credible and be able to walk the talk. Employees should also have the possibility to appeal any decision made and receive a fair hearing in return, implying that leaders need to be approachable (Burchell and Robin, 2011).

Organizational justice and a perception of fairness may eventually lead to job satisfaction, commitment, as well as to a reduction in intentions to leave the company and theft; outcomes beneficial to any organization (Latham, 2012).

Following this, one may expect openness and fairness to have a positive effect on the quality of work life, leading to the subsequent hypothesis:

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Hypothesis 6: There is a positive relationship between the level of openness and fairness within a company and the quality of work life for contingent workers in the hospitality industry.

Once credibility, respect and fairness are in place employees develop trust towards their leaders, strengthening their relationship and resulting in greater cooperation and effort towards achieving company goals, as well as quicker decision-making – all of which contribute to increased productivity and eventually enhanced business performance (Burchell and Robin, 2011).

Getting back to the Great Place to Work® Model, trust may not be seen as the sole contributor to an excellent work environment. Pride and camaraderie were also found to significantly impact on employees’ relationships with their job and with each other, as well as they were found to positively affect the overall quality of work life (Burchell and Robin, 2011).

Pride

Experiencing pride in their job strengthens considerably the relationship employees have towards their work place. It is pivotal that employees feel like they make a difference to the organization, that their work is meaningful for the organization’s success and maybe even the outside world. Besides, pride may also come in the form of team pride or company pride.

Being proud of ones team’s accomplishments or being proud of the company, what its stands for, its mission and goals. Regardless of the form, pride gives employees a feeling of belonging, a feeling of being part of something meaningful, something they are willing to give extra for to get the job done. Pride may hence increase commitment, efficiency and productivity throughout the organization, as well as it may improve the employees’ quality of work life (von Marrewijk, 2004; Burchell and Robin, 2011).

Based on this, the following hypothesis was formulated:

Hypothesis 7: There is a positive relationship between the pride one has in one’s work and company and the quality of work life for contingent workers in the hospitality industry.

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Camaraderie

Another important determinant of an exceptional work environment and the fifth dimension within the Great Place to Work® Model is camaraderie. When camaraderie characterizes the relationship between the employees, a strong sense of family and a great team spirit may be sensed throughout the organization. Employees will feel more energized, more willing to go the extra mile for the team, be more supportive and be more welcoming to new employees. Importantly to mention in this regard, trust and fairness can be considered the building blocks and prerequisites of camaraderie. Without trust and fairness, employees will rarely be authentic or show the additional support and care for their coworkers. Hence, leaders bear great responsibility as to creating a trustworthy environment, and setting out rules and procedures to guarantee fair and respectful treatment of all members of the organization (Burchell and Robin, 2011).

Having said that, camaraderie may be broken down into three integral parts: intimacy, hospitality and community. Intimacy depicts the sense of care and support employees show for one another, especially in times of demanding projects, sickness, or even personal loss.

Hospitality encompasses both enjoyment and welcoming. Creating a friendly and fun work environment, and giving new employees a special warm welcome in order to strengthen the feeling of belongingness and the team spirit, as well as fostering a sense of community.

Considering the organizational environment a community indicates a strong evidence of employees’ great team spirit and cooperation, and can be facilitated by leaders’ “role modeling, formal programs, and social networking” (Burchell and Robin, 2011, p. 171).

Camaraderie and a friendly atmosphere are hence expected to contribute positively to an improved quality of work life for contingent workers in the hospitality industry:

Hypothesis 8: There is a positive relationship between the level of camaraderie and friendliness within a company and the quality of work life for contingent workers in the hospitality industry.

As shown above, the Great Place to Work® Model provides substantial insight into how the relationships between employees and their leaders, employees and their job and employees with each other can be enhanced and strengthened. As such, it represents a significant tool in answering the research question of the present study and will therefore be

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used for the empirical research as outlined further on in the paper.

2.3 Positive Outcomes of an Improved Quality of Work Life

In order to understand the real benefit of investing into an improved quality of work life, the subsequent part of this study will outline the various advantages it offers and how such ameliorations may yield considerable improvements of the contingent workers’ rather negative characteristics. As outlined earlier in this study, employing contingent workers may pose several challenges to organizations, particularly with regards to turnover, commitment and performance. Turnover was identified as being considerably high, whereas commitment and performance were found to be rather low compared to permanent employees (Lee-Ross, 1995; Connelly and Gallagher, 2004; Reynolds et al., 2004; Ainsworth and Purss, 2009;

George et al., 2010; Alverén et al., 2012).

2.3.1 Reduced Turnover and Absenteeism

According to several authors (Havlovic, 1991; Lau and May, 1998; Lau, 2000; Burchell and Robin, 2011), an improved quality of work life may considerably reduce absenteeism and turnover, hence tackle one of the major and most costly issues hospitality organizations are facing (Lee-Ross, 1995; Worcester 1999, cited in Reynolds et al., 2004, p. 230). Companies known for their great work place culture benefit from more job applications, providing a greater pool of talent to choose from, as well as from an increased number of employees who wish to make a career within the company and even stay until retirement (Lau and May, 1998;

Burchell and Robin, 2011). Employees at so-called great work places develop a strongly positive attitude towards their job, eliminating their intentions to leave the company (Herzberg et al., 1997). A satisfying work environment may hence be recognized for building enduring employee loyalty (Hatch and Schultz, 2008). Generally, reduced absenteeism and turnover may be traced back to the sense of community, the team spirit and the camaraderie apparent in high internal service quality organizations. Employees develop strong relationships based on mutual trust with their leaders, their job and their colleagues. Besides, organizations investing into an improved quality of the work environment show their appreciation to employees, making them feel valued, which leads to greater levels of job security and job satisfaction, and hence fewer intentions to leave the company (Lau and May, 1998; Lau, 2000; Burchell and Robin, 2011).

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2.3.2 Organizational Commitment

In addition to reduced turnover and absenteeism, the trust, pride and camaraderie that can be found in organizations with a high quality of work life was also found to lead to enhanced levels of commitment and effort (Lau and May, 1998; Lau, 2000; Burchell and Robin, 2011).

Employees feeling at ease with the organization show a greater sense of attachment, which may potentially lead to organizational citizenship behavior (OCB), earlier identified as

“(p)erformance by employees beyond what is required or expected and which does not lead to any formal rewards” (Smith et al. 1983, cited in Alverén et al., 2012, p. 1958). Besides OCB, organizations may be able to increase their employee ownership quotient, generally referred to as the “proportion of all employees who are so satisfied, loyal and committed to the value offered by the organization that they contribute ideas for further improvement and help recruit high-potential friends to join the cause” (Heskett et al., 2008, p. 2). Following these definitions, it is obvious how valuable OCB and a high employee ownership quotient are, especially in the service industry where employees are the face of the organization influencing customers’ experiences, evaluations and overall satisfaction levels with their attitudes and behaviors (Heskett et al., 1994, Johnson and Ashforth 2008, cited in Buonocore, 2010, p. 378). The additional effort and service such highly committed employees appear to be willing to give may yield exceptional results regarding improved organizational effectiveness, and eventually increased customer satisfaction and company profitability (Heskett et al., 1994; Lau and May, 1998; Alverén, 2012). Besides, a study by LePla (2013) found that highly committed employees would rather decrease their salary by up to 15 percent than working in a competitive firm.

Taking the idea of the employee ownership quotient further, the concept of the employee as a living brand should be mentioned as an additional potential benefit of investing into an improved quality of work life. Karmark (2005) suggests that employees living the brand internalize the brand’s values and strongly identify with the organization’s goals, which enables them to “deliver the brand’s promises to the consumer” (Karmark, 2005, p. 106).

Employees are seen as highly committed and loyal to the brand, making them become the brand. Personal values of the employee become congruent with brand values, which results in the employee as a living brand. The benefits of such loyalty and commitment seem obvious, particularly in service-providing organizations: reduced turnover and absenteeism, greater effort towards organizational goals, retention of employee knowledge, building of

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relationships between employees and customers resulting in more targeted and efficient service, and eventually improved business performance (Heskett et al., 1994; Lau and May, 1998; Karmark, 2005; Xu and van der Heijden, 2005; Burchell and Robin, 2011).

2.3.3 Growth and Profitability – The Service-Profit Chain

Evidently investing into an improvement of the quality of work life appears to offer considerable advantages for any organization (Heskett et al., 1994; Lee-Ross, 1995; Lau and May, 1998; Smithey Fulmer et al., 2003; Burchell and Robin, 2011). Implementing quality of work life programs, “a firm can provide a workplace that satisfies its employees and still be profitable to its investors” (Lau and May, 1998, p. 224). Organizations known for their attractive workplace culture and their appreciation of employees will eventually be rewarded with an improved bottom-line performance (Lau and May, 1998). As Smithey Fulmer et al.

(2003) demonstrated, by being an attractive employer firms produce better financial results compared to companies not investing into an improved internal service quality. These observations go along with Heskett et al.’s (1994) service-profit chain framework, which suggests a link between profitability, customer loyalty and employee satisfaction. According to the authors, high levels of employee satisfaction will ultimately lead to satisfied and loyal customers, which will drive general profits and growth. More precisely, profit and growth are boosted by customer loyalty, which directly results from customer satisfaction. Satisfaction levels are influenced by the quality and value of the service offered to customers. This so- called external service value is created by a satisfied, loyal and productive workforce, whose satisfaction stems from high levels of internal service quality and superior support systems (Heskett et al., 1994, Lau and May, 1998). One may therefore conclude “the trail of money leads back to its source” (Heskett et al., 2003, p. 111): a satisfied, productive and loyal workforce (see Figure 5, p. 30).

The following explanations of the respective links will deepen the understanding of the relationships in the service-profit chain and demonstrate how the improvement of the quality of work life may yield various advantages to any organization.

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Fig. 5: The Links in the Service-Profit Chain.

Source: Heskett et al. (2008).

Customer Loyalty drives Profitability and Growth

Organizations have come to realize the substantial cost of loosing customers, resulting in an increasing number of companies aiming at a zero customer defection culture in order to fully reap the benefits of a loyal customer base. As illustrated by Reichheld and Sasser (1990), an increase in customer loyalty by as little as 5% can lead to profit increases from 25% to up to 85%, acknowledging customer loyalty as a more important factor of profit than market share. Such tremendous profit increases may be attributed to reduced costs of acquiring customers, as well as to profits from increased purchases. Moreover, operating costs are substantially reduced for a loyal customer base due to a more efficient and targeted service, leading to further increases in profits. In addition to that, loyal customers often generate free word-of-mouth advertising and referrals (Reichheld and Sasser, 1990; Howell, 1996). Hence, loyalty appears to boost the lifetime value of a customer; a concept often referred to as “the net of the revenues obtained from that customer over the lifetime of transactions with that customer minus the cost of attracting, selling, and servicing that customer, taking into account the time value of money” (Berger and Nasr 1998, cited in Jain and Singh, 2002, p. 37). As a result, increased customer loyalty and lifetime value may be

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considered “the single most important driver of long-term financial performance” (Jones and Sasser, 1995, p. 91).

Customer Satisfaction drives Customer Loyalty

For a customer to become loyal, he or she must experience satisfaction with the products and services offered. According to Jones and Sasser (1995, p. 91), “(t)he only truly loyal customers are totally satisfied customers”, meaning that the slightest reduction in total satisfaction may cause considerable reductions in loyalty. The following Table 2 illustrates how different levels of satisfaction may be interpreted.

Response Description Loyalty

5 Completely satisfied Very loyal

3 - 4 Satisfied Easily switched to a competitor

1 - 2 Dissatisfied Very disloyal

Tab. 2: Interpreting Levels of Satisfaction.

Source: Jones and Sasser (1995), p. 98.

Similar observations can be found in the work of Heskett et al. (1994). The authors illustrate how Xerox, a multinational document management corporation, came to realize that customers being very satisfied (rating the satisfaction level with a 5) had six times higher repurchase intentions than those being merely satisfied (rating the satisfaction level with a 4).

As a result, instead of focusing on achieving both 4s and 5s, Xerox shifted its major focus towards a 100% 5s philosophy. A strategy that may yield a competitive advantage for any organization.

Value Customer Satisfaction

The most common and most universally accepted definition of value as perceived by the consumer was made by Zeithaml (1988, p. 14), terming the construct as “the consumer’s overall assessment of the utility of a product based on perceptions of what is received and what is given”. Hence, value represents “a tradeoff of the salient give and get components”

(Zeithaml, 1988, p.14). As to the present study, the relationship marketing’s perspective on perceived value might be of particular importance considering the exceptional characteristics of the service industry – intangibility, heterogeneity, inseparability of production and consumption, and perishability (Zeithaml et al. 1985, cited in Wallace and de Chernatony,

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2007, p. 91). As Ravald and Grönroos (1996) illustrate, value derives from the product and its supporting services plus the customer-supplier relationship. Thus, even if the product or service’s benefits are low, a good relationship can increase the value for the customer.

Though, if the relationship is of a negative nature, it may undermine the product or service’s benefits, resulting in a decreased value for the customer. Hence, to ensure the creation of value and stimulate customer satisfaction considerate employee selection plays a crucial role, particularly in the service industry, where employees often are the single point of contact between customers and the organization (Hatch and Schultz, 2009; Johnson and Ashforth 2008, cited in Buonocore, 2010, p. 378).

Employee Productivity drives Value

As mentioned in the previous paragraph, employees play a pivotal role in creating value for the customer. Though, for employees to achieve this ambitious goal the necessary resources and support systems need to be available. Generally, the importance of investing in employees has to be mentioned in this context. Training and career development appear to be fundamental, as well as the creation of an inspiring and service-oriented work environment (Bansal et al., 2001; Heskett et al., 2003; Liao and Chuang 2004, cited in Xu and van der Heijden 2005, p. 139).

Heskett et al. (1994), for example, illustrate how exceptional employee productivity creates value for customers at Southwest Airlines. The authors describe several of Southwest Airlines practices, such as open seating, reusable boarding passes or employees that can perform several jobs. All company practices that ultimately create value for the consumer by offering

“frequent departures, on-time service, friendly employees, and very low fares” (Heskett et al., 1994, p. 167). Southwest Airlines represents therefore an outstanding example of how employee productivity can result in increased perceptions of value.

Employee Loyalty drives Productivity

According to Heskett et al (1994) and Xu and van der Heijden (2005), loyal and long- tenured employees are noted for showing higher levels of productivity. They are considered more knowledgeable and experienced with regards to job tasks; resulting in increased productivity, lower training costs, and indisputably, better customer service (Payne et al.

2000, cited in Xu and van der Heijden, 2005, p. 140; Xu and van der Heijden, 2005).

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